Are you considering starting your very own franchisee restaurant business? Well, you are not alone! Did you know that the restaurant industry is one of the fastest-growing industries globally? The National Restaurant Association predicts that the industry's sales will exceed over $899 billion this year in the United States alone. Yes, the restaurant business is very lucrative, but it is also a very competitive industry. Therefore, you must make sure that you start your franchisee restaurant business the right way to give yourself the best chance of standing out and succeeding in the industry.

To help you start your franchisee restaurant business, we have put together a 10-step checklist to follow. These steps have been tried and tested, and they are the most critical steps you need to take to ensure that your business is successful.

Starting a franchisee restaurant business involves a lot of preparation, planning, and execution. With this in mind, we have broken down the 10 steps for you to follow:

  • Research and analyze market demand
  • Establish the company structure
  • Develop a business plan
  • Acquire necessary permits and licenses
  • Develop financial model and secure funding
  • Select a franchisee site and obtain the lease
  • Establish a partnership with the franchise
  • Hire personnel and purchase inventory
  • Open for business and advertise the location
  • Monitor and adjust operations

These ten steps may sound straightforward, but they require a lot of dedication, hard work, and patience to ensure that your franchisee restaurant business is up and running successfully. Following this checklist will help to streamline the process, allowing you to open your doors with confidence and start running a profitable business in no time.

Embarking on your new venture is an exciting time, but it is essential to take the time to research and follow the right steps to secure success. Each of the 10 steps leading to opening your doors plays an integral part in the journey. Happy reading, and good luck with your franchisee restaurant business!

1. Research & Analyze Market Demand

To start and successfully open a franchise restaurant business, you need to understand the demand and market behavior of your potential customers. Analyzing the market demand will help you to evaluate the financial feasibility of the business and set realistic revenue goals.

The following are the essential steps to research and analyze market demand:

  • Identify your target market: Determine your potential customers' demographics, such as their age range, gender, location, and income level. Use this information to understand their buying behavior and their preferences in the food industry.
  • Conduct market research: Use online surveys or focus groups to understand your customer's preferences in menu items, pricing, ambiance, and location of the restaurant.
  • Analyze the competition: Look at your main competitors' pricing strategies, menu offerings, and marketing techniques to understand their strengths and weaknesses.
  • Evaluate the market demand: Use all the information you have gathered to determine the potential demand for your franchise restaurant business in the specific location you are considering.

Tips & Tricks:

  • When identifying your target market, determine the percentage of the population that falls within your target audience, as this will help you to estimate the potential demand for your restaurant.
  • Conduct market research not only on your initial location but also on the surrounding areas to extend your reach and cater to a wider audience.
  • Be creative in your market research. Try reaching out to your potential customers on social media platforms to get insights into their preferences and feedback on different menu offerings.

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2. Establish Company Structure

Once you have made the decision to open a franchisee restaurant business, the next step is to establish its company structure. The structure you choose will depend on various factors such as your long-term goals, legal and financial liabilities, and taxation issues. Establishing the right company structure is crucial to the success of your business and will determine how your business operates and how much control you have over it.

2.1 Choose Your Business Entity Type

The first step to establishing your company structure is to choose your business entity type. You can choose from various types such as sole proprietorship, partnership, limited liability company (LLC), and corporation. Each entity type has different legal and financial implications. You should consider factors such as your personal and business liability, the number of owners, and taxation issues before making a decision. It's essential to consult with a qualified attorney or accountant to choose the entity type that best suits your business.

2.2 Determine Shareholders and Board of Directors

If you decide to form a corporation, you'll need to determine the shareholders and board of directors. Shareholders are the owners of the corporation, and the board of directors is responsible for the overall management of the business. You should choose responsible and experienced individuals who can guide and direct your business towards success.

2.3 Obtain Licenses and Permits

Before you can start operating your franchisee restaurant business, you'll need to obtain various licenses and permits. These permits vary depending on your location, your business entity, and the type of restaurant you operate. Some of the permits and licenses you may need include food service permits, business licenses, liquor licenses, and health department permits. Failing to obtain the necessary licenses and permits can result in hefty fines and even business closure.

2.4 Hire Employees and Establish HR Policies

Another crucial step in establishing your company structure is to hire employees and establish HR policies. Hiring the right employees is essential to the success of your business. You should carefully consider the skills, qualifications, and experience of each candidate before making a hiring decision. You should also establish clear HR policies that outline your expectations, rules, and regulations for your employees.

2.5 Establish Accounting and Record-Keeping Practices

Establishing accounting and record-keeping practices is vital for the success of your franchisee restaurant business. You should keep accurate records of your income and expenses, accounts payable and receivable, and inventory. These records are essential for tax purposes, obtaining loans or investors, and making informed business decisions. You should also consider consulting with a qualified accountant to establish accounting practices that comply with legal requirements and save you money in the long run.

Tips & Tricks:

  • Choose a company structure that aligns with your long-term goals. It's easier and less expensive to change your company structure earlier rather than later.
  • Obtain all necessary licenses and permits as early as possible and renew them when needed.
  • Establish clear and comprehensive HR policies that prevent any legal or ethical violations and promote a positive and productive work environment.

3. Develop A Business Plan

A business plan is an essential component for starting any business. It is a roadmap that outlines the goals, strategies, and financial projections for your franchise restaurant. The following chapters will guide you on how to develop a comprehensive business plan.

Chapter 1: Executive Summary

The executive summary is the most critical part of the business plan. It summarizes the entire plan and should be compelling enough to capture the attention of potential investors and lenders. It should highlight the unique selling proposition of your franchise restaurant, market analysis, financial projections, and growth strategies.

Chapter 2: Market Analysis

This chapter provides a detailed analysis of the franchise market, including your target audience, competitors, and market trends. It should also include the strengths, weaknesses, opportunities, and threats (SWOT) analysis to help you identify potential challenges and opportunities in the market.

Chapter 3: Products and Services

This chapter should describe the menu, pricing, and portion sizes of your franchise restaurant. Describe your restaurant's unique value proposition and how it differentiates from other restaurants in the market.

Chapter 4: Marketing and Sales Strategies

This section outlines the marketing and sales strategies to attract and retain customers. It should describe the advertising, social media, digital marketing, and sales promotion activities that you will undertake to build brand awareness and customer loyalty.

Chapter 5: Management and Organization

This chapter outlines the management structure, responsibilities, and daily operations of your franchise restaurant. It should also include the job responsibilities of each management team member and the organizational chart.

Chapter 6: Financial Projections

The financial projections section outlines the expected revenue, expenses, and profitability of your franchise restaurant. It includes the cash flow statement, income statement, and balance sheet. The financial projections help you understand the amount of capital required, break-even point, and return on investment.

Chapter 7: Funding Request

This chapter outlines the funding requirements of your franchise restaurant. It should describe the amount of capital required, sources of funding, and the terms and conditions of the funding. This section is vital if you plan to seek financing from lenders or investors.

Tips & Tricks:

  • Be realistic with your financial projections.
  • Provide detailed information to support your SWOT analysis.
  • Include a contingency plan to mitigate risks and uncertainties.

Developing a comprehensive business plan is a critical step towards opening a successful franchise restaurant. The business plan serves as a roadmap that outlines the strategies, funding requirements, and expected financial results. It helps you identify potential challenges and opportunities, develop marketing and sales strategies, and measure performance against projections. We hope this guide has helped you develop a business plan that will enable you to start, launch, and operate a successful franchise restaurant.

4. Acquire Necessary Permits & Licenses

Acquiring necessary permits and licenses is an essential part of starting a franchisee restaurant business. Without proper permits and licenses, operating a restaurant business is illegal and may lead to closure and even legal issues.

The permits and licenses required to operate a franchisee restaurant vary depending on the location of the business. It is important to conduct research and understand the specific permits and licenses required in your local area and state. A business consultant or attorney can also assist in identifying the necessary permits and licenses for your franchisee business.

Tips & Tricks:

  • Research and identify important permits and licenses at the beginning of the planning process to ensure enough time for the application process.
  • Maintain up-to-date permits and licenses to avoid any legal issues.
  • Seek professional assistance from an attorney or business consultant to ensure compliance with local and state requirements.

Some common permits and licenses required for franchisee restaurant business operations include a food service permit, occupancy permit, business license, sign permit, and liquor license. Each of these permits and licenses has a specific application process and requirements, including fees, inspections, and background checks.

The application process for permits and licenses can take time, so it is essential to start the process as early as possible. Additionally, it is vital to maintain up-to-date permits and licenses throughout the operation of your franchisee restaurant business.

Keep in mind that failure to acquire and maintain necessary permits and licenses can result in fines, legal issues, and even the closure of the business. Therefore, it is important to prioritize and complete this step with diligence and attention to detail.

5. Develop Financial Model & Secure Funding

Developing a financial model and securing funding are crucial steps in opening a franchise restaurant business. Here is what you need to do:

  • Create a Business Plan: A business plan is a core document that outlines your goals, strategies, target market, projected financials, and more. You need a strong business plan to convince investors, partners, and lenders.
  • Estimate Your Startup Costs: Calculate the total cost of starting a franchise restaurant, including franchise fees, equipment, licenses, permits, rent, salaries, marketing, and more. This will help you determine how much funding you need.
  • Research Funding Sources: There are several sources of funding for franchise restaurants, including loans, grants, investors, crowdfunding, and more. Research each option and determine which one is the best fit for your business.
  • Prepare a Pitch Deck: A pitch deck is a brief presentation that describes your franchise restaurant business, its market potential, and your financial projections. It should be clear, concise, and compelling.
  • Approach Investors and Lenders: Once you have your business plan, startup costs, funding sources, and pitch deck ready, it's time to approach potential investors and lenders. You can reach out to friends, family, angels, VCs, banks, SBA lenders, and more.
  • Negotiate Terms and Close Deals: When you have interested investors or lenders, negotiate the terms of your funding, including the interest rate, repayment plan, equity, and more. Make sure to read the fine print and understand the risks and benefits of each deal before signing.

Top Financing Tips for Franchise Restaurant Businesses

  • Start Early: It takes time to develop a solid financial model, research funding sources, and prepare a pitch deck. Start at least six months before you plan to open your franchise restaurant.
  • Be Realistic: Investors and lenders want to see realistic financial projections and a clear plan for growth. Don't overestimate your revenue or underestimate your expenses.
  • Build Relationships: Networking is key to finding funding sources for your franchise restaurant. Attend industry events, join online communities, and ask for referrals.

6. Select Franchisee Site & Obtain Lease

Choosing the right location for your franchisee restaurant is crucial for success. It's important to consider foot traffic, accessibility, proximity to other businesses, and the demographics of the surrounding population. Once you've identified potential locations, it's time to negotiate a lease agreement with the property owner.

  • Location Research: Conduct thorough research on potential locations by analyzing demographics, competition, and local regulations to ensure that the site is suitable for a restaurant business.
  • Site Selection: Consider several factors when selecting a site for your franchisee restaurant business, such as accessibility, parking, and visibility. It's essential to choose a location that can attract customers and generate revenue.
  • Lease Negotiation: Negotiate favorable lease terms with the property owner, including rent, length of the lease, rent increases, and any other pertinent details.

Tips & Tricks

  • Consider hiring a real estate agent or broker to help you find the perfect location and negotiate the best lease terms.
  • Do your due diligence by researching the property title, zoning regulations, and any other legal issues that may impact your business.
  • Factor in future growth when selecting a site for your franchisee restaurant business, as you'll want to ensure that the location can accommodate future expansion if necessary.

Once you've selected a site and secured a lease agreement, it's time to move on to the next step in starting your franchisee restaurant business - obtaining financing.

7. Establish Partnership With Franchise

Establishing a partnership with a franchise can be a great way to open a successful restaurant. Here are some steps to follow:

  • Research potential franchise partners: It's important to choose a franchise that aligns with your goals and values. Do some research to find potential partners that are a good fit.
  • Reach out and initiate contact: Once you have identified potential partners, reach out to them and express your interest in partnering with their franchise.
  • Attend informational meetings: Attend any informational meetings or webinars that the franchise holds to learn more about their business, values, and requirements for partnership.
  • Discuss financials: Have an open and honest conversation about the financial requirements of the partnership. Be sure that you fully understand the costs involved before committing.
  • Sign a partnership agreement: Once you have determined that the partnership is a good fit for you, sign a partnership agreement that outlines the terms of the partnership.

Tips & Tricks:

  • Choose a franchise that is well-established and has a proven track record of success.
  • Make sure you understand the expectations and requirements of the partnership before committing.
  • Consider partnering with a franchise that offers ongoing training and support.

By establishing a partnership with a franchise, you can benefit from their established brand recognition, marketing support, and operational expertise. Make sure to choose a partner that aligns with your goals and values to set your franchise up for success.

8. Hire Personnel & Purchase Inventory

One of the crucial aspects of starting a franchise restaurant business is to hire personnel and purchase inventory. These two go hand in hand because you need employees to manage the inventory. In this chapter, we'll explore what you need to consider when hiring personnel and purchasing inventory.

Hiring Personnel

The success of a franchise restaurant business heavily relies on the people who work there. It's essential to find and hire people who are passionate about serving customers and upholding the brand's values and standards. Here are some tips for hiring personnel:

  • Start with the basics: create job descriptions for each position to articulate responsibilities and qualifications necessary for the job.
  • Use job boards, social media, and local ads to advertise your job postings.
  • Have a structured interview process and select candidates that align with the brand's values.
  • Train new hires with an onboarding process that includes brand values, customer service, and operating procedures.

Purchasing Inventory

Purchasing inventory requires a delicate balance of finding the best products at the right price without sacrificing quality. Here are some tips for purchasing inventory for your franchise restaurant business:

  • Create a food and beverage menu in the brand's style and research suppliers that offer products that align with the menu.
  • Find suppliers that can deliver inventory consistently and on time.
  • Establish a budget for inventory and negotiate the price with suppliers.
  • Track inventory levels with a purchasing system that allows you to predict demand and avoid stock-out situations.

Tips & Tricks

  • Consider hiring a purchasing manager to focus on procurement strategy and negotiating deals with suppliers.
  • Establish a relationship with your suppliers to get special deals and discounts.
  • Use technology like POS software with stock management features to streamline inventory management.

Taking the time to hire the right personnel and purchasing the right products will set your franchise restaurant business up for success. Ensure that the employees and inventory represent the brand's values while offering excellent customer service and quality food and beverages.

9. Open For Business & Advertise Location

After completing the previous eight steps, your franchise restaurant business is now ready for launch. It's time to open for business and start generating revenue. In this chapter, we will cover the essential aspects of launching a franchise restaurant and advertising the location to attract customers.

  • Ensure proper training and staffing: Before opening your restaurant, ensure that all staff members, including chefs, servers, and managers, are properly trained and ready to serve customers. Make sure you have enough staff members to avoid understaffing, which can adversely affect operations.
  • Promote your grand opening: A grand opening is an excellent way to create buzz and attract customers to your franchise restaurant. It's a good idea to host a 'soft opening' before the actual launch to gain feedback from customers. Leverage social media, email marketing, press releases, and advertising to promote the opening and attract customers.
  • Implement a loyalty program: Offering a loyalty program to customers can help generate repeat customers and increase sales. Consider partnering with food ordering and delivery services to expand your reach and attract a broader audience.

Once your franchise restaurant is open for business, ensure that the location is visible to customers and accessible. Here are some strategies for advertising the location:

  • Create signage: Outdoor signage can help attract customers to your franchise restaurant. Ensure that the signage has high visibility and legibility, including the restaurant's name, logo, and opening hours.
  • Partner with local businesses: Partnering with local businesses such as hotels, offices, and community centers can help attract customers who are looking for nearby dining options.
  • Take advantage of online marketing: Social media and online directories such as Google My Business and Yelp can be powerful tools for advertising your franchise restaurant's location. Ensure that your website and online profiles have accurate and up-to-date information, including the restaurant's address, contact details, and opening hours.

Tips & Tricks:

  • Consider hosting special events such as tastings, trivia nights, or live music to attract customers and create a memorable experience.
  • Utilize email marketing to promote special deals, discounts, or new menu items to attract customers and build a loyal customer base.
  • Offer online ordering and delivery services to reach customers who prefer the convenience of ordering from home or office.

Launching a franchise restaurant can be a daunting task, but with the right strategy and implementation, you can create a successful business that generates revenue and satisfies customers. Follow these ten steps and consult with professionals when necessary to ensure your business has the best chance of success.

10. Monitor & Adjust Operations

Once your franchisee restaurant business is up and running, it's crucial to practice continuous monitoring and adjusting of its operations to ensure its success. Here are some tips to help you monitor and adjust your franchisee restaurant business:

  • Track Your Performance - Create a system to track your sales, revenue, customer feedback, employee performance, and other crucial metrics to evaluate your business's performance.
  • Analyze Your Data - Use your performance data to identify issues, opportunities, and patterns that can guide your decision-making process.
  • Implement Changes - Use the insights gained from your analysis to implement necessary changes to improve your restaurant's operations, such as updating the menu, changing the marketing strategy, or improving customer service.
  • Stay Updated - Stay up-to-date with industry trends, regulations, and customer preferences to adapt your operations accordingly.

Monitor and Adjust Tips & Tricks

  • Conduct regular surveys or focus groups to gather feedback from your customers.
  • Use social media platforms to engage with customers and monitor their comments and reviews.
  • Attend industry events and seminars to stay updated on the latest trends and best practices.

By monitoring and adjusting your operations regularly, you can ensure that your franchisee restaurant business stays competitive, efficient, and profitable in the long run.

Opening a franchisee restaurant business can be a daunting task, but by following these ten steps, you are setting yourself up for success. The restaurant industry is on the rise, with sales predicted to exceed $899 billion in the United States this year, making it a lucrative business to be in. With so much competition in the industry, it's essential to prepare, plan and execute correctly to give yourself the best chance of standing out and succeeding.

From researching market demand and developing a business plan, to obtaining necessary permits and licenses, and hiring personnel and purchasing inventory, each step plays an integral part in your journey. By following this checklist, you can streamline the process and open your doors with confidence, knowing that you have done everything to ensure the success of your business.

Starting your franchisee restaurant business takes a lot of dedication, hard work, and patience. However, with the right groundwork laid out for you, it's much easier to navigate your path to success. We hope that this 10-step checklist has been helpful, and we wish you the best of luck as you embark on this exciting new venture!

Excel financial model

Franchise Restaurant Financial Model
  • 5-Year Financial Projection
  • 40+ Charts & Metrics
  • DCF & Multiple Valuation
  • Free Email Support